Brussels office market bounces back strongly

Tim Harrup

Yesterday saw the first of two end of year press conferences held by real estate advisor JLL. This one concentrated on the ‘Offices’ and ‘Living’ sectors, and also represented the first chance for Kasper Deforche to appear in his recently officialised role as CEO of JLL Belux.

In this first report we take a look at the state of the office market. Take-up is estimated to be around 440,000 m² by the end of the year, which represents an increase of some 37% over 2020. And despite the fact that 2020 was hard hit by the pandemic, this year’s figure is also 7% up on the five year average. Almost two thirds of all transactions have taken place in the CBD, with the North District claiming a significant portion of this. The total number of transactions (figures from the beginning of December) is noticeably down on 2020, at 264 against 312. This of course means that average transaction size is greater – at 1,600 m² it is double that of 2020 and a third up on the five year average. Grade A buildings (best location and equipment, sustainable) also represented virtually two thirds of all transactions.

This last factor leads on to observing a rapidly growing element in the criteria for selecting new premises. Head of Office Advisory Erik Verbruggen said that the three traditionally most important criteria for this have always been ‘Location, Location, Location’. Now however, these criteria have changed and what occupants are looking for is ‘Location, Location, Sustainability’. Companies and other organizations are looking to move to genuinely greener buildings, and by contrast with what is now considered to be the covid-induced norm, not necessarily to smaller amounts of space. This is particularly true of large occupants, with some examples of those which have not used their move to downsize including BNP, Total Energies, ING, Ernst & Young, Merck Sharpe and Dohme…

In terms of large transactions, JLL has recorded eight of over 10,000 m², twice as many as in 2020. The five largest deals were as follows: Proximus for the Boréal building (35,000 m²), The Régie des Bâtiments for Möbius II (33,000 m²), the European Commission for Realex (25,000 m²), KU Leuven for Pacheco (21,000 m²), and Total Energies for Multi (17,000 m²).

Vacancy has tended to climb a little, with the Brussels-wide total now standing at 8.5%, against 7.5% a year ago. Vacancy in the CBD currently stands at 4.5%, against 3.8%. The delivery of around 360,000 m² of space has played a part in this. This last factor is not expected to have the same effect in 2022, however. Only 50,000 m² of speculative deliveries are currently scheduled and only four buildings of more than 5,000 m², with demand for Grade A space likely to be 300,000 m². Total take-up for 2022 is estimated to be in the 300-400,000 m² range – a typical figure over recent times.

Rents are set to remain stable except for the decentralized districts which may see a rise of around 8%. The total office stock across all of Brussels is also stable at 13.2 million square metres. This is due to the fact (among others) that while 1.5 million square metres has disappeared (much of this converted to residential) over the past ten years, 1.9 million square metres has been delivered in the same period.